DESCRIPTION OF CAPITAL STOCK
                                 OF SONUS CORP.

                  The authorized  capital stock of Sonus Corp.  (the  "Company")
consists of an unlimited  number of Common Shares,  without nominal or par value
(the "Common  Shares"),  and an unlimited  number of Preferred  Shares,  without
nominal or par value (the  "Preferred  Shares").  The Company  was  incorporated
under the laws of the province of Alberta, Canada in July 1993 and was continued
under the laws of the Yukon Territory, Canada in 1998.

                  The  Company's  Board  of  Directors  (the  "Board")  has  the
authority to issue Preferred  Shares in one or more series and to fix the number
of shares comprising any such series and the designations,  rights,  privileges,
restrictions,  and conditions attaching thereto, including the rate or amount of
dividends  or the  method of  calculating  dividends,  the dates of  payment  of
dividends, the redemption,  purchase,  and/or conversion price or prices and the
terms and conditions of any such redemption,  purchase,  and/or conversion,  and
any sinking fund or other provisions,  without any further vote or action by the
holders of Common Shares.  The outstanding  series of Preferred Shares include a
series  designated  as Series A  Convertible  Preferred  Shares  (the  "Series A
Shares"),  consisting  of 13,333,333  shares issued on December 24, 1997,  and a
series  designated  as Series B  Convertible  Preferred  Shares  (the  "Series B
Shares"), consisting of 2,500,000 shares issued on October 1, 1999. A summary of
certain of the  preferences,  limitations  and  relative  rights of the Series A
Shares and Series B Shares is set forth below.

COMMON SHARES

                  Voting  Rights.  Holders of Common  Shares are entitled to one
vote per  share at all  meetings  of  shareholders  of the  Company.  Except  as
otherwise required by law or unless the Board determines  otherwise with respect
to a particular series of Preferred Shares,  the Common Shares and all series of
the Preferred Shares having voting rights will vote together as one class. Under
the Business  Corporations Act (Yukon),  the holders of each class of shares are
generally  entitled  to vote as a  separate  class  (whether  or not such  class
otherwise has voting  rights) upon any proposal to amend the Company's  Articles
to (i)  increase or decrease  the maximum  number of  authorized  shares of that
class,  (ii) increase the maximum  number of authorized  shares of another class
having  rights or  privileges  equal or superior  to those of that class,  (iii)
effect an exchange,  reclassification or cancellation of all or a portion of the
shares of that  class,  (iv)  add,  change or  remove  the  rights,  privileges,
restrictions  or conditions  attached to that class,  (v) increase the rights or
privileges of any class having  rights or privileges  equal or superior to those
of that class,  (vi) create a new class  having  rights or  privileges  equal or
superior to those of that class,  (vii) change the rights or  privileges  of any
class with inferior rights or privileges such that they are equal to or superior
to those of that class;  (viii)  effect an  exchange of shares of another  class
into the shares of that  class,  or (ix)  restrict  the issue or transfer of the
shares of that class or extend or remove that restriction.

                  Other. All Common Shares rank ratably with regard to dividends
(if and when declared by the Board). In the event of a liquidation, dissolution,
or winding up of the  Company,  holders of Common  Shares are  entitled to share
equally and ratably in the assets of the Company,  if any,  remaining  after the
payment of all liabilities of the Company and the liquidation

                                      -1-
<PAGE>

preference of any outstanding  class or series of Preferred  Shares.  The Common
Shares do not have preemptive  rights.  All outstanding  Common Shares are fully
paid and nonassessable.

SERIES A CONVERTIBLE PREFERRED SHARES

                  Certain of the preferences, limitations and relative rights of
the Series A Shares are summarized below.

                  Voting Rights. Each Series A Share is entitled to one-fifth of
a vote (or such other number of votes equal to the number of Common  Shares into
which  such  Series  A Share  shall  be  convertible  from  time to time) in the
election  of  directors  and in any other  matters  presented  for action by the
Company's  shareholders.  Except to the extent otherwise  required by law or the
Company's  Articles,  holders  of Series A Shares  and of any other  outstanding
series of Preferred  Shares will vote together with the holders of Common Shares
as a single class. See "Common Shares--Voting  Rights." Any change in the rights
and  preferences of the Series A Shares will require the approval of the holders
of at least 66-2/3% of the outstanding  Series A Shares,  voting separately as a
class.

                  Dividends.  Each Series A Share is entitled to receive,  when,
as and if declared by the Board out of the Company's  assets  legally  available
for payment,  cumulative  dividends from the date of original issuance,  payable
annually  at a rate of 5% per annum on a base  amount  of $1.35  per share  (the
"Base  Amount").  All accrued and unpaid  dividends  will be forfeited  upon the
conversion of the Series A Shares. The dividend rate will be subject to increase
on  specified  dates in the  event  that  certain  conditions  (the  "Triggering
Conditions") have not been met. The Triggering Conditions are as follows:

                  (a)  The  Common  Shares  are  listed  on the New  York  Stock
         Exchange,  the American Stock  Exchange,  or the Nasdaq National Market
         (each a "U.S. Principal Market");

                  (b) The Common Shares are traded on a U.S. Principal Market at
         a daily  closing  price greater than $12.00 per Common Share on each of
         the ten consecutive trading days preceding the applicable date; and

                  (c) The Company's net income before income taxes, dividends on
         the Series A Shares and Series B Shares,  and  amortization of goodwill
         and covenants not to compete for the three consecutive  fiscal quarters
         preceding  the  applicable  date shall have averaged at least $0.35 per
         fully diluted  Common Share per fiscal  quarter (for purposes of making
         this  calculation,  the Common Shares issuable upon the exercise of the
         Warburg  Warrants (as defined below under the heading  "Warrants") will
         not be counted).

         If the Triggering Conditions have not been met by:

                  (x) January 1, 2003, the dividend rate will  thereafter be 15%
         per annum of the Base Amount;

                  (y) January 1, 2004, the dividend rate will  thereafter be 18%
         per annum of the Base Amount; or

                                      -2-
<PAGE>

                  (z) January 1, 2005, the dividend rate will  thereafter be 21%
         per annum of the Base Amount.

                  As soon as the Triggering Conditions have been satisfied,  the
dividend rate will revert to 5% per annum of the Base Amount.  All references to
per share amounts or prices with respect to the  Triggering  Conditions  will be
adjusted for any subdivision,  consolidation,  or reclassification of the Common
Shares.

                  Dividends on the Series A Shares may, in the discretion of the
Board and subject to applicable  regulatory approvals at the time of payment, be
paid in Common  Shares  based on the market  price of such  shares.  Accruals of
dividends on Series A Shares will not bear interest.

                  No dividends on the Common Shares, the Series B Shares, or any
other share capital ranking, as to dividends, equal to or junior to the Series A
Shares as to dividends may be declared or paid unless full accumulated dividends
on the Series A Shares have been paid or declared and sufficient funds set aside
for such  payment.  The  foregoing  prohibition  will not apply to  dividends or
distributions payable in Common Shares or certain other comparable actions.

                  Liquidation  Preference.  In the  event  of any  voluntary  or
involuntary liquidation,  dissolution,  or winding up of the Company, subject to
the rights of holders of any  securities  of the Company  ranking  senior to the
Series A  Shares  upon  liquidation,  the  holders  of  Series A Shares  will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders,  before any distribution of assets is made to holders of Common
Shares or any  other  securities  ranking  junior  to the  Series A Shares  upon
liquidation, a liquidating distribution in an amount equal to the greater of (i)
$1.35 per share plus any  accrued and unpaid  dividends  or (ii) the amount that
would have been distributable to such holders if they had converted their Series
A Shares into Common Shares immediately prior to such dissolution,  liquidation,
or winding  up, plus any accrued  and unpaid  dividends.  The sale,  conveyance,
mortgage,  pledge or lease of all or substantially all the assets of the Company
will  be  deemed  to be a  liquidation  of  the  Company  for  purposes  of  the
liquidation rights of the holders of Series A Shares.  After payment of the full
amount of the liquidating  distribution to which they are entitled,  the holders
of  Series A Shares  will  have no right to any of the  remaining  assets of the
Company.

                  Optional  Redemption.  The Series A Shares may not be redeemed
before December 24, 2002. Thereafter, the Series A Shares may be redeemed at the
option of the  Company,  in whole or in part.  The  redemption  price will be an
amount  equal to the  greater of (i) $1.35 per share plus any accrued and unpaid
dividends or (ii) the fair market value of a Series A Share as  determined  by a
nationally  recognized  independent  investment  banking firm selected by mutual
agreement of the Company and the holder of a majority of the outstanding  Series
A Shares.  The Series A Shares are not subject to  mandatory  redemption  or any
sinking fund provisions.

                  Conversion Rights. The Series A Shares may be converted at any
time,  in whole or in part,  at the option of the holder  thereof,  into  Common
Shares.  The  conversion  rate is currently  equal to one Common Share for every
five Series A Shares surrendered for conversion.  The conversion rate is subject
to further adjustment for stock dividends, stock splits,

                                      -3-
<PAGE>

recapitalizations,  and other anti-dilution adjustments.  Upon the conversion of
any Series A Shares,  any  accrued  and unpaid  dividends  with  respect to such
shares will be forfeited.  The Company has the right to force  conversion of the
Series A Shares,  in whole or in part,  upon  satisfaction of all the Triggering
Conditions.  Common Shares  issuable upon conversion of the Series A Shares will
be fully paid and nonassessable and will not have preemptive rights.

         Preemptive Rights.  The Series A Shares do not have preemptive rights.

SERIES B CONVERTIBLE PREFERRED SHARES

                  Certain of the preferences, limitations and relative rights of
the Series B Shares are summarized below.

                  Voting Rights. Each Series B Share is entitled to one vote (or
such other number of votes equal to the number of Common  Shares into which such
Series B Share  shall be  convertible  from  time to  time) in the  election  of
directors  and in any  other  matters  presented  for  action  by the  Company's
shareholders.  Except to the extent  otherwise  required by law or the Company's
Articles,  holders  of Series B Shares  and of any other  outstanding  series of
Preferred  Shares  will vote  together  with the  holders of Common  Shares as a
single class. See "Common  Shares--Voting  Rights." Any change in the rights and
preferences  of Series B Shares will  require the  approval of the holders of at
least 66-2/3% of the outstanding Series B Shares, voting separately as a class.

                  Dividends.  No  dividends  will be declared on Series B Shares
until  October 31,  2000.  At October 31,  2000,  if the Company  meets the 2000
Earnings  Target (as  defined  below),  each  Series B Share will be entitled to
receive,  when and as declared by the Board out of the Company's  assets legally
available  for  payment,  preferential,  cumulative  dividends in respect of the
period  beginning  October 1, 1999,  and ending  October 31, 2000, and quarterly
thereafter, payable in U.S. dollars, at a rate of 8% per annum until October 31,
2004;  12% per annum from  November 1, 2004 through  October 31,  2005;  15% per
annum from November 1, 2005 through October 31, 2006; and 18% per annum from and
after  November  1,  2006,  each on a base  amount of $4.00 per share (the "Base
Amount").

                  The 2000  Earnings  Target  will be deemed to have been met if
the Company's  "EBTA,"  defined as net income before income taxes,  dividends on
Series A Shares and Series B Shares,  and amortization of goodwill and covenants
not to compete, for the fiscal year ending July 31, 2000, is equal to or greater
than $0.20 per fully diluted  Common Share.  For purposes of  calculating  EBTA,
certain costs  incurred by the Company in connection  with the hiring of a Chief
Financial  Officer ("CFO Costs") will be added back to net income  provided such
person is hired on or before  January 31,  2000.  Common  Shares  issuable  upon
exercise of the Warburg  Warrants  will be excluded for purposes of  calculating
the number of fully diluted Common Shares.

                  If the 2000 Earnings Target is not met,  dividends will not be
payable until the Company meets the quarterly  earnings  targets set forth below
(the "Quarterly  Earnings  Targets") for four consecutive  fiscal quarters.  The
Quarterly Earnings Targets are as follows:

                                      -4-
<PAGE>


                                                           Target EBTA per Fully
                  Period                                   Diluted Common Share
                  ------                                   --------------------

                  Fiscal quarter ending 10/31/99                $  0.02
                  Fiscal quarter ending 1/31/00                    0.03
                  Fiscal quarter ending 4/30/00                    0.07
                  Fiscal quarter ending 7/31/00                    0.08
                  Fiscal quarter ending 10/31/00                   0.07
                  Fiscal quarter ending 1/31/01                    0.10
                  Fiscal quarter ending 4/30/01                    0.15
                  Fiscal quarter ending 7/31/01                    0.17
                  Fiscal quarter ending 10/31/01                   0.16
                  Fiscal quarter ending 1/31/02                    0.20
                  Fiscal quarter ending 4/30/02                    0.26
                  Fiscal quarter ending 7/31/02                    0.30

                  If the  Quarterly  Earnings  Targets  are  not  met  for  four
consecutive fiscal quarters by the fiscal quarter ended July 31, 2002, dividends
will not accrue or be payable on Series B Shares.

                  All accrued and unpaid  dividends  will be forfeited  upon the
conversion of Series B Shares. Accruals of dividends on Series B Shares will not
bear interest.

                  No dividends on the Common Shares, the Series A Shares, or any
other share capital  ranking,  as to  dividends,  equal to or junior to Series B
Shares as to dividends may be declared or paid unless full accumulated dividends
on Series B Shares have been paid or declared and sufficient funds set aside for
such  payment.  The  foregoing  prohibition  will  not  apply  to  dividends  or
distributions payable in Common Shares or certain other comparable actions.

                  Liquidation  Preference.  In the  event  of any  voluntary  or
involuntary dissolution,  liquidation,  or winding up of the Company, subject to
the rights of holders of any securities of the Company  ranking senior to Series
B Shares  upon  liquidation,  the holders of Series B Shares will be entitled to
receive,  out of the  assets  of  the  Company  available  for  distribution  to
shareholders,  before  any  distribution  of assets is made to holders of Common
Shares  or  any  other  securities  ranking  junior  to  Series  B  Shares  upon
liquidation, a liquidating distribution in an amount equal to the greater of (i)
$4.00 per share  (subject to adjustment  as provided in the  Articles)  plus any
accrued  and  unpaid   dividends  or  (ii)  the  amount  that  would  have  been
distributable  to such holders if they had converted  their Series B Shares into
Common Shares immediately prior to such dissolution, liquidation, or winding up,
plus any  accrued  and  unpaid  dividends,  whether or not  declared.  The sale,
conveyance,  mortgage, pledge or lease of all or substantially all the assets of
the Company  will be deemed to be a  liquidation  of the Company for purposes of
the liquidation  rights of the holders of Series B Shares.  After payment of the
full amount of the  liquidating  distribution  to which they are  entitled,  the
holders of Series B Shares will have no right to any of the remaining  assets of
the Company.

                                      -5-
<PAGE>

                  Optional  Redemption.  The Series B Shares may not be redeemed
before  October 1, 2004.  Thereafter,  Series B Shares  may be  redeemed  at the
option of the Company, in whole or in part, for an amount per share equal to the
applicable  Conversion Rate then in effect  multiplied by the greater of (1) the
conversion price then in effect plus any accrued and unpaid dividends per Series
B Share or (2) the fair  market  value  of a Series B Share as  determined  by a
nationally  recognized  independent  investment  banking firm selected by mutual
agreement  of the Company  and the  holder(s)  of a majority of the  outstanding
Series B Shares.  Series B Shares are not subject to mandatory redemption or any
sinking fund provisions.

                  Conversion  Rights.  Series B Shares may be  converted  at any
time,  in whole or in part,  at the option of the holder  thereof,  into  Common
Shares.  The number of Common Shares  issuable upon  conversion of each Series B
Share (the  "Conversion  Rate") will be equal to an amount  determined by adding
$10,000,000  (the  original  purchase  price),  plus an  adjustment  factor  (as
described  below) (the  "Adjustment  Factor"),  and dividing  that result by the
conversion  price,  and then again by  2,500,000  (the number of Series B Shares
originally sold) (the "Conversion Rate Formula").  The initial Adjustment Factor
is zero and the  initial  conversion  price is $4.00,  resulting  in an  initial
Conversion  Rate  of one  Common  Share  per  Series  B  Share  surrendered  for
conversion.

                  The  Conversion  Rate is subject to increase in the event that
the Company fails to achieve the 2000 Earnings Target and, if such target is not
achieved,  to further increase until the Quarterly  Earnings Targets are met for
four  consecutive   quarters  (each  is  referred  to  herein  as  an  "Earnings
Adjustment"),  as described below. In addition,  the conversion price is subject
to decrease to the extent that the  Company's  receivables  as of July 31, 1999,
that are collected by July 31, 2000,  total less than  $4,736,000  ("Receivables
Adjustment").

                  The  Receivables  Adjustment,  if any,  will be  calculated as
follows.  In the  event  the  Company  fails  to  collect  the  full  amount  of
receivables as of July 31, 1999,  the conversion  price for Series B Shares will
be reduced by an adjustment amount determined by multiplying the amount by which
$4,736,000 exceeds actual amounts collected by the Company on or before July 31,
2000,  by a factor of 7, and  dividing  that  result by the sum of (i) the total
number of issued and  outstanding  Common Shares as of September 30, 1999,  plus
(ii) the total number of Common  Shares into which  outstanding  Series B Shares
are  convertible,  plus (iii) the total  number of Common  Shares into which the
outstanding convertible notes of the Company are convertible as of September 30,
1999, plus (iv) the total number of Shares into which the  outstanding  Series B
Shares  are  convertible  as of  October  31,  2000.  The new  conversion  price
following  a  Receivables  Adjustment  will be  calculated  by  subtracting  the
adjustment   amount  calculated  in  accordance  with  the  foregoing  from  the
conversion price then in effect.

                  An  Earnings  Adjustment  will occur if the  Company  fails to
achieve the 2000 Earnings Target.  This initial Earnings  Adjustment would cause
the  Conversion  Rate  to  increase   beginning  October  31,  2000,  such  that
approximately 200,000 additional Common Shares would be issuable upon conversion
at that date with  respect to the four fiscal  quarters  then ended.  Additional
Earnings  Adjustments  will be made each  quarter  thereafter  until the Company
meets the Quarterly Earnings Targets for four consecutive quarters.

                                      -6-
<PAGE>

                  The amount of the Adjustment Factor to be applied to determine
the new Conversion  Rate resulting from failure to reach the Quarterly  Earnings
Targets  will be  determined,  initially,  by taking 2 percent of the sum of the
original  purchase  price  ($10,000,000)  plus  the  sum of all  prior  Earnings
Adjustments  (including  an adjustment  resulting  from a failure to achieve the
2000 Earnings  Target).  After  November 1, 2004, the percentage for purposes of
calculating  the  adjustment  amount will  increase  to 3 percent  for  Earnings
Adjustments  occurring on or before October 31, 2005; 3 3/4 percent for Earnings
Adjustments occurring on or after November 1, 2005, and on or before October 31,
2006;  and 4 1/2  percent  for any  Earnings  Adjustment  occurring  on or after
November 1, 2006. The resulting Adjustment Factor will then be inserted into the
Conversion  Rate Formula to determine the new Conversion  Rate. Once the Company
has met the specified  Quarterly  Earnings Targets for four  consecutive  fiscal
quarters,  no further Earnings  Adjustments in the Conversion Rate will be made.
In the  event  the  Company  meets  the  Quarterly  Earnings  Targets  for  four
consecutive  fiscal  quarters,  Adjustments  will cease as of any fiscal quarter
ending on or after the last day of the quarter as to which such targets are met.

                  The Conversion Rate is subject to further adjustment for stock
dividends, stock splits, recapitalizations, and other anti-dilution adjustments.
Upon the  conversion  of any Series B Shares,  any accrued and unpaid  dividends
with respect to such shares will be forfeited.

                  The Company has the right to effect the  mandatory  conversion
of the Series B Shares, in whole or in part, if all of the following  conditions
have been satisfied:

                  (a)  The  Common  Shares  are  traded  on the New  York  Stock
         Exchange, the American Stock Exchange, or the Nasdaq National Market at
         a daily  closing  price  greater than $8.00 per Common Share on each of
         the ten consecutive trading days preceding the applicable date; and

                  (b) The  Company's  EBTA for the three  preceding  consecutive
         fiscal  quarters  shall have  averaged at least $.35 per fully  diluted
         Common  Share per  fiscal  quarter.  Common  Shares  issuable  upon the
         exercise of the Warburg  Warrants  are  excluded  for  purposes of this
         calculation.

                  All  references to per share amounts or prices with respect to
the above  conditions will be adjusted for any  subdivision,  consolidation,  or
reclassification of the Common Shares.

                  Common Shares  issuable upon conversion of the Series B Shares
will be fully paid and nonassessable and will not have preemptive rights.

         Preemptive Rights.  The Series B Shares do not have preemptive rights.

WARRANTS

         At October 29, 1999,  the Company had  outstanding  2,000,000  purchase
warrants  to  purchase  Common  Shares  issued in  connection  with the  private
placement of the Series A Shares in December 1997 (the "Warburg Warrants"). Each
share purchase  warrant is exercisable for one Common Share at an exercise price
of $6.75 per share until October 1, 2004.  The Company may force the exercise of
the warrants upon satisfaction of all the Triggering Conditions.

                                      -7-
<PAGE>

CONVERTIBLE SECURITIES AND STOCK OPTIONS

                  At October 29, 1999, the Company had  outstanding  convertible
subordinated notes in an aggregate principal amount of $930,839 convertible into
143,206 Common Shares,  13,333,333  Series A Shares  convertible  into 2,666,666
Common Shares,  2,500,000  Series B Shares  convertible  into  2,500,000  Common
Shares,  and stock  options held by  employees,  directors  and officers of, and
consultants to, the Company exercisable for a total of 2,369,000 Common Shares.

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

                  Following  is a  summary  of the  principal  Canadian  federal
income tax considerations  under the Income Tax Act (Canada) (the "Tax Act") and
the  regulations  thereunder  generally  applicable to a holder of Common Shares
who,  for  purposes of the Tax Act,  holds such shares as capital  property  and
deals at arm's  length  with  the  Company.  Generally,  Common  Shares  will be
considered to be capital  property to a holder provided the holder does not hold
the Common  Shares in the course of carrying on a business of trading or dealing
in securities and has not acquired them in one or more  transactions  considered
to be an adventure in the nature of trade.  Special rules apply to  non-resident
insurers that carry on an insurance business in Canada and elsewhere.

                  This  summary is based upon the  provisions  of the Tax Act in
force as of October 29, 1999,  all specific  proposals to amend the Tax Act that
have been publicly announced prior to such date (the "Proposed Amendments"), and
the  Company's  understanding  of  the  current  published   administrative  and
assessing policies and practices of Revenue Canada, Customs, Excise and Taxation
("Revenue  Canada").  For the purposes of this summary, it has been assumed that
the Tax Act will be amended as proposed,  although no assurance  can be given in
this regard.  This summary is not exhaustive of all possible  federal income tax
consequences  and, except for the Proposed  Amendments,  does not anticipate any
changes in the law, whether by legislative, governmental or judicial decision or
action,  nor does it take into account  provincial,  territorial  or foreign tax
considerations, which may differ significantly from those discussed herein. This
summary is not applicable to holders who are "specified financial  institutions"
for  purposes  of the Tax Act, a holder  that is a  "financial  institution"  as
defined in the Tax Act for purposes of  mark-to-market  rules, or to a holder of
an interest that would be a "tax shelter investment" as defined in the Tax Act.

                  THIS  SUMMARY IS OF A GENERAL  NATURE ONLY AND IS NOT INTENDED
TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY  PARTICULAR
HOLDER.  ACCORDINGLY,  HOLDERS SHOULD CONSULT THEIR INDEPENDENT TAX ADVISERS FOR
ADVICE WITH RESPECT TO THE INCOME TAX CONSEQUENCES  RELEVANT TO THEIR PARTICULAR
CIRCUMSTANCES.

                  The following  applies to holders of Common Shares who are not
resident  in Canada for  purposes  of the Tax Act and who do not use or hold and
are not  deemed to use or hold  their  Common  Shares  in, or in the  course of,
carrying on a business in Canada.

                  Dispositions  of Common Shares.  A  non-resident  holder will,
upon a disposition or deemed  disposition  of Common  Shares,  not be subject to
taxation in Canada on any gain

                                      -8-
<PAGE>

realized on the disposition  unless the shares are "taxable  Canadian  property"
for the  purposes of the Tax Act and no relief is afforded  under an  applicable
tax convention between Canada and the country of residence of the holder.  Since
the Common Shares are listed on a prescribed  stock exchange for the purposes of
the Tax Act,  Common Shares held by a non-resident  holder will generally not be
"taxable  Canadian  property"  unless,  at any time during the five-year  period
immediately  preceding the disposition,  the non-resident  holder,  persons with
whom the non-resident  holder did not deal at arm's length,  or the non-resident
holder together with such persons, owned or had the right to acquire 25% or more
of the issued shares of any class of the capital of the Company. Any interest in
shares or options in respect of shares will be considered  to be the  equivalent
of ownership of such shares for purposes of the  definition of taxable  Canadian
property.

                  Non-residents   whose  shares  constitute   "taxable  Canadian
property"  will be subject to  taxation  in respect of a  disposition  or deemed
disposition  of Common  Shares on the same basis as  Canadian  residents  unless
otherwise  exempted  by an  applicable  tax  convention  between  Canada and the
country of residence of the holder.

                  Pursuant to the  Canada-United  States Income Tax  Convention,
1980 (the  "Convention"),  shareholders of the Company that are residents in the
United  States  for the  purposes  of the  Convention  and  whose  shares  might
otherwise be "taxable Canadian property" may be exempt from Canadian taxation in
respect of any gains on the  disposition  of the  Common  Shares,  provided  the
principal  value of the Company is not  derived  from real  property  located in
Canada at the time of disposition.

                  Non-resident  holders  who might hold their  Common  Shares as
"taxable  Canadian  property" should consult their own tax advisers with respect
to the income tax consequences of a disposition of their Common Shares.

                  Non-resident  holders  whose  shares  are  repurchased  by the
Company,  except in respect of certain purchases made by the Company in the open
market, will be deemed to have received the payment of a dividend by the Company
in an amount  equal to the excess  paid over the  paid-up  capital of the Common
Shares so  purchased.  Such deemed  dividend  will be excluded from the holder's
proceeds of  disposition of such Common Shares for the purposes of computing any
capital  gain or loss but will be subject to Canadian  non-resident  withholding
tax in the manner described below under "Dividends."

                  Dividends.  Dividends  received  by a  non-resident  holder of
Common Shares will be subject to Canadian  withholding tax at the rate of 25% of
the  amount  thereof  unless  the rate is  reduced  under the  provisions  of an
applicable  tax  convention  between  Canada and the country of residence of the
holder.  The  provisions of the Convention  generally  reduce the rate to 15%. A
further  reduction to 5% under the Convention will be available if the recipient
is a company which owns at least 10% of the voting shares of the Company.

INVESTMENT CANADA ACT

                  The   Investment   Canada  Act  (the  "ICA")   prohibits   the
acquisition of control of a Canadian  business by  non-Canadians  without review
and approval of the Investment  Review

                                      -9-
<PAGE>

Division of Industry  Canada,  the agency that  administers the ICA, unless such
acquisition  is  exempt  from  review  under  the  provisions  of the  ICA.  The
Investment  Review  Division of Industry  Canada must be notified of such exempt
acquisitions.  The ICA covers acquisitions of control of corporate  enterprises,
whether by purchase of assets,  shares or "voting  interests"  of an entity that
controls,  directly  or  indirectly,  another  entity  carrying  on  a  Canadian
business.

                  Apart  from the ICA,  there  are no other  limitations  on the
right of  nonresident or foreign  owners to hold or vote  securities  imposed by
Canadian  law  or  the  Company's  Articles.  There  are  no  other  decrees  or
regulations  in Canada that restrict the export or import of capital,  including
foreign exchange controls, or that affect the remittance of dividends,  interest
or other payments to nonresident holders of the Company's Common Shares,  except
as discussed elsewhere herein.

OTHER

                  The  foregoing is only a brief  description  of the rights and
limitations  of the  Company's  capital stock and is subject to and qualified by
reference to all applicable  provisions of the Business Corporations Act (Yukon)
and the Company's Articles.

                  CIBC Mellon Trust Company and ChaseMellon Shareholder Services
L.L.C. are co-transfer agents and co-registrars for the Common Shares.


                                      -10-